Germany, France, U.K. Propose Levy on Banks

Germany, France and the U.K. jointly called for levies on banksâ balance sheets in an attempt to overcome opposition to the proposal by other members of the Group of 20 nations before this weekâs summit.

In addition to todayâs announcement of a levy by the British government, France will present a plan in the coming days, while the German government will issue draft legislation âthis summer,â according to a draft of the joint statement issued by the German government.

âAll three levies will aim to ensure that banks make a fair contribution to reflect the risks they pose to the financial system and wider economy, and to encourage banks to adjust their balance sheets to reduce this risk,â the e-mailed statement from the Finance Ministry in Berlin said.

G-20 finance ministers failed this month to agree on a global bank levy thatâs promoted by the U.S. and European countries and opposed by countries whose banks fared better in the financial crisis, such as Canada and Brazil. The EU has promised to push for the plan at this weekâs G-20 summit in Toronto.

U.K. Prime Minister David Cameronâs government said it will impose a tax on bank balance sheets from next year that will generate 2 billion pounds ($3 billion) in annual revenue. Germany in March laid out its framework for a bank levy that would generate more than 1 billion euros ($1.2 billion) for a dedicated fund.

Level Field

Todayâs joint statement said that while the three nationsâ bank levy will differ according to âdomestic circumstances,â the amount of revenue generated from the various plans âwill take into consideration the need to ensure a level playing field.â

The G-20 faces a test over unity with respect to the banking levy, a German government official said at a briefing today ahead of the June 26-27 summit in Toronto. Germany will seek to bring in EU-wide levies if the G-20 fails to agree.